Exchange rate regimes and monetary autonomy: Empirical evidence from selected Caribbean countries

This paper uses the error correcting methodology to investigate how pegged and non-pegged exchange rate regimes in a set of Caribbean countries affect the closeness of the relationship between changes in a base country rate and the local rate. This interest rate parity condition is subjected to effects arising from capital controls and common shocks related to inflation and external debt. The results support the standard theory that peg countries (like Barbados) follow the base country interest rate more closely than the managed float or flexible rate economies (such as Trinidad and Tobago and Jamaica). In addition, the paper supports the open economy macroeconomic policy trilemma proposition that only two of the following goals – stability in the exchange rate, national independence in monetary policy and free capital mobility- can be achieved simultaneously.Exchange rates, Monetary policy, Error correcting mechanisms

A Note on Causality between Debt and Sovereign Credit Ratings using Panel Tests

This paper uses linear and nonlinear panel causality tests to empirically explore the direction of causality between external debt stocks and credit ratings for a group of developing countries over the period 1998 to 2008. The results indicate that for the vast majority of the countries in the panel, a bi-directional causal relationship between external debt and sovereign ratings is evident

A Note on Causality between Debt and Sovereign Credit Ratings using Panel Tests

This paper uses linear and nonlinear panel causality tests to empirically explore the direction of causality between external debt stocks and credit ratings for a group of developing countries over the period 1998 to 2008. The results indicate that for the vast majority of the countries in the panel, a bi-directional causal relationship between external debt and sovereign ratings is evident

Exchange rate regimes and monetary autonomy: Empirical evidence from selected Caribbean countries

This paper uses the error correcting methodology to investigate how pegged and non-pegged exchange rate regimes in a set of Caribbean countries affect the closeness of the relationship between changes in a base country rate and the local rate. This interest rate parity condition is subjected to effects arising from capital controls and common shocks related to inflation and external debt. The results support the standard theory that peg countries (like Barbados) follow the base country interest rate more closely than the managed float or flexible rate economies (such as Trinidad and Tobago and Jamaica). In addition, the paper supports the open economy macroeconomic policy trilemma proposition that only two of the following goals – stability in the exchange rate, national independence in monetary policy and free capital mobility- can be achieved simultaneously

Current Account Deficit Sustainability: The Case of Barbados

Abstract This paper investigates the sustainability of the current account deficit i

A Note on Causality between Debt and Sovereign Credit Ratings using Panel Tests

This paper uses linear and nonlinear panel causality tests to empirically explore the direction of causality between external debt stocks and credit ratings for a group of developing countries over the period 1998 to 2008. The results indicate that for the vast majority of the countries in the panel, a bi-directional causal relationship between external debt and sovereign ratings is evident

Threshold Effects of Sovereign Debt: Evidence from the Caribbean

This paper addresses the issue of threshold effects between public debt and economic growth in the Caribbean. The main finding is that there exists a threshold debt to gross domestic product (GDP) ratio of 55–56 percent. Moreover, the debt dynamics begin changing well before this threshold is reached. Specifically, at debt levels lower than 30 percent of GDP, increases in the debt-to-GDP ratio are associated with faster economic growth. However, as debt rises beyond 30 percent, the effects on economic growth diminishes rapidly and at debt levels reaching 55–56 percent of GDP, the growth impacts switch from positive to negative. Thus, beyond this threshold, debt becomes a drag on growth

Essays on the nature and impact of financial liberalisation

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